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Where Taxpayers and Advisers Meet

Effective dates for changes impacting CGT on second home

estateexec
Posts:22
Joined:Thu Apr 21, 2016 10:05 am
Effective dates for changes impacting CGT on second home

Postby estateexec » Sun Mar 31, 2024 4:33 pm

Wondering if someone can advise on the following 2 scenarios:

I own a second home 100% and therefore on sale would be charged CGT at the higher rate. Property owned for 10 years. If I changed the ownership so that my husband (a basic taxpayer) owned 50% or less of the property, would the CGT split between us come into effect on the date of the change in beneficial ownership or apply to the prior 10 years as well (ie full term of ownership)?

If we moved to the second home and met all the HMRC criteria for it being our "main home" , but did not manage to sell our current main home for 6 months, at what point in time would the principal private residence and associated capital gains liability switch between the properties? On the date we moved to the 2nd home or the date of sale of the current home?

Thank you

AGoodman
Posts:1765
Joined:Fri May 16, 2014 3:47 pm

Re: Effective dates for changes impacting CGT on second home

Postby AGoodman » Tue Apr 02, 2024 8:50 am

1. You need to be more specific here. He would become the part owner ("for CGT") on the day he acquires the interest. If you are referring to PPR (because it has been or may become his main home) then there are helpful provisions for transfers between spouses. You don't mention if it has ever been your home , or indeed if it has ever been his home.

2. If you moved into the other home, it would de facto become your main home the day it becomes your main home. However, you would benefit from PPR on your current home for the 9 month period following the move (i.e. you would qualify for full PPR on your current home provided it has always qualified until now and you exchanged on a sale within 9 months of moving out).

AGoodman
Posts:1765
Joined:Fri May 16, 2014 3:47 pm

Re: Effective dates for changes impacting CGT on second home

Postby AGoodman » Tue Apr 02, 2024 8:52 am

Re: 1, the PPR provisions can also be unhelpful if you are thinking that you could give your husband a share on the day you move into the property. In that case, he would also inherit your ownership period for PPR.

estateexec
Posts:22
Joined:Thu Apr 21, 2016 10:05 am

Re: Effective dates for changes impacting CGT on second home

Postby estateexec » Tue Apr 02, 2024 5:31 pm

Thank you very much for your reply.
Regarding point 1, the house has never been my or my husband's main home as it was inherited.
If I gave him a share of the ownership on the day we moved in and made it our main home for PPR, am I correct in understanding that you are saying the CGT on the time that the property has been a second home would still be due 100% by myself and I would not be able to take advantage of him being a basic rate taxpayer for his portion of the ownership? ie CGT liability split between us follows the same time periods as the ownership split between us.

AGoodman
Posts:1765
Joined:Fri May 16, 2014 3:47 pm

Re: Effective dates for changes impacting CGT on second home

Postby AGoodman » Wed Apr 03, 2024 10:20 am

No, not saying that at all.

He would receive the 50% (say) share with your original acquisition value so, on a subsequent sale, 50% of the gain would accrue to him.

When it comes to PPR, he would inherit your ownership period so would be treated as having owned it for 10 years. If you moved into it for 2 years before selling, he would benefit from PPR relief on 2/12 ths of his share of the gain (as would you with your own share of the gain).

estateexec
Posts:22
Joined:Thu Apr 21, 2016 10:05 am

Re: Effective dates for changes impacting CGT on second home

Postby estateexec » Wed Apr 03, 2024 1:37 pm

Thank you very much for your clarification and assistance.


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